September 20, 2011

When You've Lost David Brooks...

When the president said the unemployed couldn’t wait 14 more months for help and we had to do something right away, I believed him. When administration officials called around saying that the possibility of a double-dip recession was horrifyingly real and that it would be irresponsible not to come up with a package that could pass right away, I believed them.

I liked Obama’s payroll tax cut ideas and urged Republicans to play along. But of course I’m a sap. When the president unveiled the second half of his stimulus it became clear that this package has nothing to do with helping people right away or averting a double dip. This is a campaign marker, not a jobs bill.

It recycles ideas that couldn’t get passed even when Democrats controlled Congress. In his remarks Monday the president didn’t try to win Republicans to even some parts of his measures. He repeated the populist cries that fire up liberals but are designed to enrage moderates and conservatives.

...

This wasn’t a speech to get something done. This was the sort of speech that sounded better when Ted Kennedy was delivering it. The result is that we will get neither short-term stimulus nor long-term debt reduction anytime soon, and I’m a sap for thinking it was possible.

Yes, I’m a sap. I believed Obama when he said he wanted to move beyond the stale ideological debates that have paralyzed this country. I always believe that Obama is on the verge of breaking out of the conventional categories and embracing one of the many bipartisan reform packages that are floating around.

But remember, I’m a sap. The White House has clearly decided that in a town of intransigent Republicans and mean ideologues, it has to be mean and intransigent too. The president was stung by the liberal charge that he was outmaneuvered during the debt-ceiling fight. So the White House has moved away from the Reasonable Man approach or the centrist Clinton approach.

It has gone back, as an appreciative Ezra Klein of The Washington Post conceded, to politics as usual. The president is sounding like the Al Gore for President campaign, but without the earth tones. Tax increases for the rich! Protect entitlements! People versus the powerful! I was hoping the president would give a cynical nation something unconventional, but, as you know, I’m a sap.

I don't see Mr. Brooks climbing on the Rick Perry bandwagon, but he might be able to get behind Mitt Romney. Let's hope he avoids a flirtation with Jon Huntsman, whose campaign message of "I'm The Republican Who Doesn't Like Republicans" has not yet caught fire.

In a conference call this morning with Chairman of the House Oversight Committee Darrell Issa, reporters were told the Attorney General in Mexico has confirmed at least 200 murders south of the border happened as a result of Operation Fast and Furious. Eleven crimes in the United States have been linked to Operation Fast and Furious up to this point.

A 2008 study of 24 leading economies by the Organization of Economic Cooperation and Development (OECD) concludes that, "Taxation is most progressively distributed in the United States, probably reflecting the greater role played there by refundable tax credits, such as the Earned Income Tax Credit and the Child Tax Credit. . . . Taxes tend to be least progressive in the Nordic countries, notably Sweden, France and Switzerland."

The OECD study--titled "Growing Unequal?"--also found that the ratio of taxes paid to income received by the top 10% was by far the highest in the U.S., at 1.35, compared to 1.1 for France, 1.07 for Germany, 1.01 for Japan and 1.0 for Sweden (i.e., the top decile's share of Swedish taxes is the same as their share of income).

I might get murdered. I was just on a far left wing website and told someone preaching the greatness of Allah that she scared me. She told me to "look in the mirror". My response: "when I look in the mirror, I'm allowed to see more than a mask with a
slit for the eyes."

California 'birther' leader Orly Taitz considering U.S. Senate bid
A leading figure in the "birther" movement is mulling returning to the California ballot in another bid for statewide office.

Republican Orly Taitz, who ran in the GOP primary for secretary of state last year, said today she is "absolutely" considering challenging Democratic Sen. Dianne Feinstein in 2012.

"I think I do have a chance specifically because I do speak Spanish and I speak Hebrew," Taitz told The Bee after attending a town hall-style event on Latino issues at the California Republican Party convention in Los Angeles.

((In a conference call this morning with Chairman of the House Oversight Committee Darrell Issa, reporters were told the Attorney General in Mexico has confirmed at least 200 murders south of the border happened as a result of Operation Fast and Furious. ))

did I hear jimmyk's interviewer use the term "fast and furious" in her setup of her last question? is it a term that is now "in the air"

For the first time in the history of the McClatchy-Marist poll, President Obama's job approval rating has fallen below 40 percent. According to the poll of 1,042 adults taken last Tuesday and Wednesday, only 39 percent of Americans approve of Obama's job as president, while record 52 percent of respondents disapprove.

The Bowles-Simpson debt commission proposed a range of top rates running from 23% to 28% under various options. Then there's this:

With a $2 billion deficit during annual year 1931, Hoover felt that he had to do something in the next year to combat it. Deficit spending is indeed an evil, but a balanced budget is not necessarily a good, particularly when the "balance" is obtained by increasing revenue and expenditures. If he wanted to balance the budget, Hoover had two choices open to him: to reduce expenditures, and thereby relieve the economy of some of the aggravated burden of government, or to increase that burden further by raising taxes. He chose the latter course. In his swan song as Secretary of Treasury, Andrew Mellon advocated, in December, 1931, drastic increases of taxes, including personal income taxes, estate taxes, sales taxes, and postal rates. Obedient to the lines charted by Mellon and Hoover, Congress passed, in the Revenue Act of 1932, one of the greatest increases in taxation ever enacted in the United States in peacetime. The range of tax increases was enormous.

You mean like signing the Smoot-Hawley tariffs in 1930 which was a direct tax on imports?

I said Hoover raised spending 50% and sent tax rates through the roof, precisely what Obama is trying to do, and your refutation of that is to assert that Hoover wanted to lower taxes but cite a chart demonstrating exactly what I said?
Again, brilliant.

In Euro news, my wife tells me that the Brussels-Halle-Vilvoorde electoral dispute has been settled and that their will soon be a real government back in Belgium which is leading some wags to ask, why?

For those who think Belgium as a country defines "dysfunctional" then I give you the what the fuss was all about:

Brussels-Halle-Vilvoorde district

Main article: Brussels-Halle-Vilvoorde

This existence of this electoral district was condemned in 2002 as unconstitutional by the Arbitration Court (Dutch: Arbitragehof, French: Cour d'Arbitrage), without however requesting the splitting of the district.

The reasons behind this ruling are as follows: the Brussels-Halle-Vilvoorde electoral district includes both the bilingual Brussels-Capital region and the unilingual Dutch Halle-Vilvoorde. Brussels is constitutionally bilingual. As such, its voters can choose candidates from both communities for European and national elections. However, because of the bilingual Brussels-Halle-Vilvoorde electoral district, that possibility is also extended to the French-speakers in the Halle-Vilvoorde district, which belongs to the Flemish Region. That allows French-speaking candidates from Brussels and Wallonia (thus from outside the Flemish region and from outside the constitutional Dutch-only area) to attract votes from outside their electoral district. The current Brussels-Halle-Vilvoorde electoral district breaches both the constitutionally established provincial borders as well as by the borders between the linguistic areas, and between the communities.

At the same time, Flemish candidates have no possibility of attracting votes from Flemings living in Wallonia, not even from those in Walloon municipalities with legally established facilities. The court ruled this unconstitutional, to much controversy.

IOW's since a lot of people from New Jersey work in New York they should be allowed to vote for Mayor of New York and Council members. [Not a bad idea, when you think about it].

"Obedient to the lines charted by Mellon and Hoover, Congress passed, in the Revenue Act of 1932, one of the greatest increases in taxation ever enacted in the United States in peacetime. The range of tax increases was enormous."

"And so we learn from history..."

Well, since the Depression began in 1929 with marginal rates at the level Republicans want today, we can conclude that marginal rates
have little to do with job creation.

Hoover was a liberal whether or not they want to claim him or not. And his policies and the current miserable failure are indistinguishable, and will be the electoral fate of both when we next get a chance at the ballot box...

Have to go to work, but from thinking about our incoming PFD checks last night it struck me that our PFD Fund might be a nice analogy to use as a way to illustrate the brokeness of our of Social Security model.

JimmyK's point was perfect when he said that History shows that when new revenue arrives in Washington it tends to get spent. Our PFD system invests our incoming Oil Wealth into funds, which then, as a result of our investments since the Funds inception, get partially doled out to the citizens of the State. According to this story, the State has paid out more than 18 Billion dollars to the citizens up here since the Funds inception, and I believe we are still siting on about 30 to 40 Billion in Investment assets.

If Social Security had indeed been put in that Lock Box and wisely invested, I suspect something similar might have ben done with that program. Instead the Fed's simply robbed Peter to pay Paul as the cash came in, so we are now looking at the Ponzi Scheme of takers exceeding makers and the whole thing about to collapse.

Anyhow, just thought the PFD might work as a decent example one could point to of how the Politicians should have handled the SS Funds in order to keep the system solvent.

Fine job JimmyK. If they are wise they will have you on many,many more times. Bye.

we can conclude that marginal rates
have little to do with job creation

Fallacious. We can conclude that low marginal rates in that instance did not stave off the Great Depression (which no one contends was caused by tax rates), just as we can conclude that the high rates of the 30's did nothing to end it.

Richard Epstein:

Does an increase in tax rates from 34 percent to 36 percent make a difference on behavior? To answer this question, we have to know something about the slope of the response curve. If the tax increase reduces the return from a dollar of labor from 66 to 64 percent, we should expect the reduction in revenue from labor to reduce income by about the same percent. The exact number cannot be pinned down in advance. But the one number that is certain to be wrong is zero.

"Epstein is 'theoretical'. I'm talking about the way things actually work."

Perhaps you could point to a flaw in Mr. Epstein's theory (but I suspect not). In what respect does his theory dart from how things actually work? Do demand curves not slope downward? Do supply curves not slope upward?

Well, I'm not sure he ever had Marty Peretz, but if he did he has sure as hell lost him:

"It is not actually his region. Still, with the arrogance that is so characteristic of his behavior in matters he knows little about (which is a lot of matters), he entered the region as if in a triumphal march. But it wasn’t the power and sway of America that he was representing in Turkey and in Egypt. For the fact is that he has not much respect for these representations of the United States. In the mind of President Obama, in fact, these are what have wreaked havoc with our country’s standing in the world. So what—or, rather, who—does he exemplify in his contacts with foreign countries and their leaders? His exultancy gives the answer away. It is he himself, lui-mème. Alas, he is a president disconnected from his nation, without enthusiasts for his style, without loyalists to his policies, without a true friend unless that’s what you can call his top aide de camp,Valerie Jarrett, which probably you can. Obama is lucky, but it’s the only luck he has, that there are nutsy Republican enemies who aspire to his job. Maybe Rick Perry can save him from … well, yes, himself. I wouldn’t take bets on that, though."

Thanks for the good wishes JOMers, but JiB please in your prayer for rain, ask God to delay it until at least mid to late October, okay? We are having almost perfect weather here right now and wouldn't want it spoiled, plus God rained on us real good and real long last Spring :)

Nothing you have offered addresses in any way the points made by Epstein.

It is simply idle to suggest that "marginal tax rates have little to do with job creation." They have much to do with it, but they are by no means the only thing that effects it. I know of no economist who disputes that, directionally, lower rates mean more private-sector job creation than higher rates, all other things being equal. Of course all other things are never equal, but it is always important to bear in mind the directional effect.

It wasn't that long ago that this darling of the liberals dismissed the courageous conservative reformer Sarah Palin as a joke. It never occurred to him that the very definition of a joke is a self-identified conservative who admires an ultra leftist like Obama.

--Well, since the Depression began in 1929 with marginal rates at the level Republicans want today, we can conclude that marginal rates
have little to do with job creation.--

--(which no one contends was caused by tax rates)--

If we're discussing marginal rates then they didn't change until 1932, which year, not coincidentally, saw the largest drop in GDP of the entire depression.

However Jude Wanniski made a compelling case that Smoot Hawley set off the stock market crash, since it was being debated at precisely the time of the crash and Hoover stupidly indicated he wouldn't veto it after the first few days of the crash, sending the markets even lower.

The children had been told to bring important family items to class at the Sweet Springs school, and school officials called police when the child produced the pipe and several baggies of drugs from his backpack, KCTV, Kansas City, reported Monday.

It is simply idle to suggest that "marginal tax rates have little to do with job creation." They have much to do with it, but they are by no means the only thing that effects it.

I don't see BF's posts, but comparing employment-population ratios for the U.S. and Western Europe gives a pretty good idea of this effect. They're about 25 percent lower in Europe, and the main factor seems to be marginal rates (broadly construed to take into account the impact of liberal unemployment insurance and welfare policies).

Add to that the History of Bush Tax Cuts to 2008 and the effect on jobs.

Marginal tax rates have little to do with job creation.--

The 1920's saw gigantic job growth.
Even Bush's relatively puny tax cuts led to a seven year expansion and the creation of millions of jobs.
Stupid "progressive" interventionist policies by both Dems and Republicans, at the end of each of those business cycles led to catastrophes and turned what should have been deep but fast recessions (as occurred in 1921 with Harding's sensible policies of steep spending and tax cuts) into prolonged agony and then progressives point to the fruits of their idiotic labors as the fault, inexplicably, of too low taxes.
Absolutely brilliant.

Former Afghan President Burhanuddin Rabbani assassinated
Burhanuddin Rabbani, who headed an Afghan government panel trying to launch negotiations with the Taliban, was killed by a suicide bomber in his home in Kabul, officials say.

The real estate bubble of the teens and twenties bursting was what started the credit collapse that brought us the Depression. The 10% margin of stocks was a symptom of the dysfunctional credit markets, not the trigger.

The real estate bubble of the teens and twenties bursting was what started the credit collapse that brought us the Depression. The 10% margin of stocks was a symptom of the dysfunctional credit markets, not the trigger.--

No doubt the 20's experienced a credit bubble just as the 2000's did, but didn't the real estate bubble pop or begin to pop in 1925 and didn't actual economic growth not turn negative until 1930?
Certainly the economy was in a perilous state and I know it's become fashionable to discount Smoot Hawley's effects recently, but I don't any more than I do Lehman's being the straw that broke the camel's back of a crisis IMO germinated in the early and mid 2000's and in reality something of an extension of the same bad Fed policies from the 1990's that gave us the underlying credit bubble of the present mess.

The current implosion has similarities to the past with some distinctions, IMO. The slower news cycle back then would allow for economic inertia to carry far further than the 24 news cycle now. That's part one. Part two would be this way. As the banks lost access to credit through their stock lending and speculations, they collapsed. Paperwork disappeared and cash movement came to a dead stop, as capital preservation became the trade. Housing ceased with the paperwork loss. Smoot-Hawley greased the skids as it ceased global trade and sent a price shock through the US. The collapse of the US credit markets was the result of the collapse of trade. So, round about, the Depression arose from bad trade practice, which exposed excessive leverage in the financial markets, including housing.

The Fed's actions in the 90's and 00's were not the cause of today's problems, except for one instance, the bailout of Long Term Capital Management. That lesson prompted the Big Banks to leverage themselves to unrealistic levels (Europe's banks did it even more so), by using the BoJ's ZIRP to buy any thing in the world's biggest carry trade. It's still being unwound, as most of today's hedge funds still rely on that funding to exist. And Lehman was the worst leveraged of the bunch and therefore the deserved poster boy status.

one thing about ATM/AMT. Muni Bonds for PUBLIC purposes are fully tax exempt -- including from the AMT.

Except that Muni bonds trade at a discount precisely because they are tax exempt.

So Theresa Heinz buys $100,000 in Muni bonds from city XYZ. The bonds pay 2% interest, while a (taxable) bond pays 4% interest. So TH gets $2,000 in interest rather than $4,000 in interest per year. The extra $2,000 that city XYZ doesn't have to pay TH gets used to pay city expenses. Just like tax money.

So if you follow the money, it looks like TH actually pays a tax rate of 50% on her muni bond income. So much for "paying a lower tax rate than her secretary."

Sorta lame to subtract the jobs lost in the housing bubble crash from those created by W's tax cuts. Especially when the subject being discussed is whether tax cuts create jobs. But it's not like algebra where a negative plus a negative is positive though ... so who knows what the numbers mean in troll-space.